Peak Oil

Big Oil To Bet On Petrochemicals As Demand Peak Looms

18 Oct 2017   Peak Oil

Remember that “This Ain’t Your Daddy’s Oil” commercial that blew up on Twitter at this year’s Super Bowl? It was about crude oil being used for things other than fuels—useful, sometimes indispensable things. Like it or not, this is what the future holds for the industry, according to a new report from Wood Mackenzie. The energy consultancy expects that petrochemicals will turn into the top driver for demand growth in crude oil in the long run as fuels lose their top spot. It’s actually demand for petrochemicals that will keep global oil demand growing until about 2035, Wood Mac says, adding that this growth, however, will slow to a crawl by that year. In places like Europe, Japan, the United States, and even China, crude oil consumption will plateau by 2035, while in India, some other Asian states, Africa, Latin America, and the Middle East, it will continue to […]

Oil demand likely to peak by 2030

18 Oct 2017   Peak Oil

As electric vehicles are to increase their popularity, particularly beyond 2025, the world petrol demand is to peak within 13 years, says a report by UK-based analysis firm Wood Mackenzie. The analysis estimates that the demand for oil in developed countries will reduce by about four million barrels per day by 2035. But, on the other hand, the developing economies will increase their demand for oil by nearly 16 million barrels per day by 2035. Currently 60 million out of the 96 million barrels of oil consumed globally every day is used in transport. But this is to decline from 2030, according to the analysis. Factors such as development of more fuel efficient vehicles, climate change policies, maturing of developing economies, and restrictions such as fuel efficiency and pollution standards imposed by governments are the other reasons for the decline in the demand. OECD oil demand reverts to structural […]

Why 2017 will go down as the beginning of the end of the internal combustion engine

12 Oct 2017   Peak Oil

General Motors outlined an all-electric path to zero emissions with at least 20 new all-electric vehicles by 2023. Electric vehicles no longer seem like a futuristic fever dream, but they remain a rarity on most American city streets, accounting for less than 1 percent of the nation’s auto sales, according to the automotive website Edmunds.com. Yet, when future auto historians look back, they may pinpoint 2017 as the year electric vehicles went from a promising progressive fad to an industry-wide inevitability. The tipping point, experts say, follows three developments, each rippling outward with economic and cultural consequences. China’s flexing: In addition to setting aggressive production quotas for EVs, China plans to scrap internal combustion engines entirely as soon as 2030. By taking a lead role in the shift to plug-ins, the world’s largest auto market is forcing the rest of the international community to follow in its footsteps. The […]

Oil: We still need (plenty) more supply

12 Oct 2017   Peak Oil

Analysts at HSBC suggest that despite a likely peak in LDV demand in 2025-30, the peak in total oil demand still looks much further off and they see a looming shortage of supply as a more pressing issue, pointing to upside in prices from current levels. Key Quotes “The rate of climate policy progress and technological advances in alternative transport means the outlook for global oil demand has become subject to an unusually high level of uncertainty.” “Our model indicates that on most scenarios, a combination of higher Electric Vehicle (EV) sales and improving fuel efficiency in the internal combustion engine (ICE) fleet leads to a peak in light duty vehicle (LDV) demand for oil in the period 2025-30, albeit with limited demand erosion before 2030 or so due to the scale of the existing LDV fleet.” “Total oil demand has the potential to continue growing for much longer, […]

China Study Warns Of Impending Oil Production Peak & World Oil Market Squeeze, + Peak Recoverable Coal ~2020

9 Oct 2017   China, Peak Oil

China is rapidly approaching peak fossil fuel extraction according to a new state-funded study led by the China University of Petroleum in Beijing. The study findings include the assertion that China will experience a peak in its total oil production (conventional + unconventional) by as early as 2018. As a result, world oil markets and geopolitics are likely to be greatly affected as China seeks to meet the widening demand shortfall through trade. Accompanying this reality, China will also be reaching peak commercially recoverable coal around 2020, according to the study. The study notes, though, that even though coal currently accounts for around 66% of China’s total energy consumption, a shift away from the resource has been underway in recent years, and that if this shift is accelerated, then demand may fall fast enough that peak coal may not occur there. For more on that, see: China Halts Construction […]

World’s Biggest Oil Trader Questions Its Own Fate

7 Oct 2017   Peak Oil

Vitol’s chief executive, Ian Taylor, said he expected the shift to electric vehicles and non-fossil fuel sources of energy to shrink the oil industry. Speaking at an event in London, the executive said crude oil demand could peak some time around 2028-2030. Vitol is responsible for the trade of around 7 percent of global oil, which makes it the biggest oil trading firm in the world. Taylor admitted he is concerned about the company’s place in a new, less oil-dependent, world. An additional cause for worry is the shrinking pool of talent, as more young people opt for a career in technology, he said. A third cause for worry for one of the world’s top oil traders is the low price of the commodity, although Taylor said that he expected prices to improve to about US$60-65 in the next two to three years. Before that, however, Taylor said , […]

It’s Been A Tough Week For Peak Oil Theorists

29 Sep 2017   Peak Oil

In news that is certain to upset adherents to the never-dying cult of Peak Oil, IHS Markit released a study on Sept. 25 indicating that, per their analysis of data from more than 440,000 oil wells in the Permian Basin, the basin still has somewhere between 60 and 70 billion barrels of producible oil to give up in coming years. That’s not exactly the “ near-infinite resource ” view of the Permian held by Allen Gilmer and his staff at DrillingInfo, but it certainly supports the notion that the basin will remain a very active area for oil and gas development for decades to come. “The Permian Basin is America’s super basin in terms of its oil and gas production history, and for operators, it presents a significant variety of stacked targets that are profitable at today’s oil prices,” Prithiraj Chungkham, director of unconventional resources for IHS, said in […]

Riding The Energy Transition – Oil Beyond 2040

26 Sep 2017   Peak Oil

The motor vehicle was very quick to replace horses in the early 20th century, and the advent of the electric car suggests that another profound shift in transportation and energy could be around the corner. This column projects how different rates of electric car adoption will effect oil demand and consumption over the next three decades. In a fast-adoption scenario, oil prices could converge to the level of current coal prices by the early 2040s. Even under a slow adoption scenario, oil could become obsolete before it is depleted. The imminent demise of oil as the world’s main energy source has been widely heralded since at least the 1950s, most famously by M King Hubbert in his ‘peak oil’ hypothesis (Hubbert 1956). Progress in oil extraction and continuing discoveries of new reserves, however, have brought this idea into question. In fact, as noted by Sheikh Zaki Yamani, a former […]

Beyond peak oil

19 Sep 2017   Peak Oil

The last decade has seen a significant change in the terms of the debate around the concept of “peak oil”. Ten years ago the focus was on when oil resources would start to run out and was still based on a concept developed in the 1950s by a Shell geophysicist called M King Hubbert. Hubbert saw in the life story of an individual oil field, which rises to maximum production and then usually rapidly declines, a model that could be applied to the industry as a whole. As a finite resource, global oil would inevitably reach a point where the only prospect was decline. Numerous worthy individuals and companies believed they could identify the peak. The US Energy Department has produced an invaluable list of those predictions. In 1972, Exxon said the peak would come around the year 2000. In 1977 with typical precision Hubbert himself put it at […]

Shell’s defence of big oil is too hopeful

13 Sep 2017   Peak Oil

Royal Dutch Shell, looking deeply into its crystal ball, sees a future that’s still heavily dependent on oil. The Anglo-Dutch giant expects crude will continue to play a major role in global energy supply for decades, even in its less oil-friendly scenario. That optimism goes someway to justifying the billions of dollars it continues to invest in exploiting new reserves and expanding its fuel network. But it’s also a view that may place too much faith in the combustion engine – and China staying with its current strategy. Despite growing evidence that the oil era is grinding to an ugly and disruptive halt, Shell remains optimistic. On Sept. 8, the company updated its two core strategic models – labeled Mountains and Oceans – which both come to similar conclusions about the future of crude and liquid hydrocarbon fuels. Although peak demand will happen sometime after 2030, and governments will […]

The Obsolescence of Oil As We Live Out the Current Technology Wave

9 Sep 2017   Peak Oil

With every new green announcement on the global technology stage we get propelled further into a reality where oil may no longer be dominant. Whether its France and India committing to phase out gas powered cars, Tesla’s quest to revolutionize the global perception of renewable energy cars or the increasing rate at which many of the earth’s inhabitants are being displaced from their habitat, the moral, health, economic and ecological arguments seem to be gaining traction after decades at the fringes. The importance of oil may endure the same fate that coal did at the turn of the 21st century. While it’s arguable that oil still has a role to play in the markets for a long time coming, when countries such as India (Nigeria’s largest oil patron) set policies to cut oil receipts by half by 2030, then it explicitly highlights the energy direction of these countries in […]

Peak oil demand in 2022

6 Sep 2017   Peak Oil

Energy demand will plateau after 2030, according to a new DNV GL (stand 5B51) model which forecasts the pace and extent of the global energy transition until 2050. While fossil fuel will still provide more than 40% Peak of the world energy demand, the consequences of the decarbonization of the energy mix and of the flattening out of energy demand are substantial, it says. DNV GL’s new Energy Transition Outlook forecasts peak global demand for oil in 2022, and peak gas in 2035, the same year in which total global energy demand is predicted to reach its highest point before flattening, thanks to step-changes in energy efficiency. Although the oil and gas industry is predicted to continue to be an important contributor to the energy transition, there needs to be development towards enhanced efficiency with reduced costs, wastage, and use of resources in all elements, says DNV GL. “Increased […]

Peak Oil Is Not The Same As Peak Demand

24 Aug 2017   Peak Oil

Following my previous article — Peak Demand? No, A New Gasoline Demand Record — I received some interesting feedback from readers. It quickly became apparent that some didn’t understand that the current discussions around “peak oil demand” are quite different than the “peak oil” arguments that were popular a few years ago. Some interpreted my headline to mean that peak oil is a myth and that oil supplies will simply continue to grow. Actually, I was addressing the irrational exuberance around the near-term peak oil demand argument, which is something entirely different. So, let’s review. Almost from the beginning of the U.S. oil industry, there have been those who suggested that it wouldn’t be long before oil production began to inevitably decline. The layman’s understanding of “peak oil” typically boiled down to “The world is running out of oil.” But that was a misunderstanding of the actual peak oil […]

A Contrarian View On The Peak Oil Debate

24 Aug 2017   Peak Oil

Summary Because peak oil demand theory has become self-evident truth, it is hard to even suggest at this point that the theory might be wrong, even when backed by solid evidence. Conventional oil production only increased by about 1.5 mb/d over the past decade. Discovery as well as current reserves data suggest a peak and decline will occur within the next decade. Expectations of unconventional oil sources making up for any loss in conventional production and making up for yearly demand growth are highly misplaced. A combination of two major trending stories from the past few years provided for a very powerful one-two punch against the whole peak oil supply theory. On the supply side, we have the U.S. shale revolution, which brought an additional 5 mb/d on the global market since 2008. On the demand side, we have had increasing speculation in regard to EVs killing oil demand […]

Running For The Exits: Peak Oil Demand

21 Aug 2017   Peak Oil

A terminal price decline in oil is inevitable. Trends in EV cost, ICE efficiency, and driverless cars will cripple oil demand. The price decline we have seen with coal — a commodity that continues to see minor demand growth — will pale in comparison to the price drop coming for oil. Investors should liquidate their connection to oil producers before the end of the current decade. A little over a year ago, I put my thoughts together on why I think we will reach peak oil demand soon — and the effects that will have on commodity prices. A Terminal Decline Peak oil supply or demand has long been a topic of discussion in commodities. In the past year, we have seen new information and a continuation of existing trends that have removed any doubts from my mind. Investing in oil companies today would only be a smart […]

Why Would Oil Demand Peak, Contrary to Peak Oil Supply?

18 Aug 2017   Peak Oil

People find it hard to believe that there is another side of the ‘Peak Oil Supply’ theory, which is ‘Peak Oil Demand’. The oil industry is quite familiar with the concept of a “Peak Oil Supply” but people find it hard to believe that there is another side of the theory, which is “Peak Oil Demand”. This article will examine why the concept of peak oil supply failed to materialize and why one should believe the concept of peak oil demand will materialize. Peak Oil Supply Theory Going back in history, the term “peak oil” was originally coined in the 1950s by M. King Hubbert who predicted that the US oil production would peak in 1970, and decline at the same rate as it arose. But in the history of the petroleum era, Matt Simmons will be remembered for calling attention to peak oil. In reality, whenever oil prices […]

Peak Oil And Peak Demand Have Entirely Different Outcomes

16 Aug 2017   Peak Oil

Following my previous article — Peak Demand? No, A New Gasoline Demand Record — I received some interesting feedback from readers. It quickly became apparent that some didn’t understand that the current discussions around “peak oil demand” are quite different than the “peak oil” arguments that were popular a few years ago. Some interpreted my headline to mean that peak oil is a myth and that oil supplies will simply continue to grow. Actually, I was addressing the irrational exuberance around the near-term peak oil demand argument, which is something entirely different. So let’s review. Almost from the beginning of the U.S. oil industry, there have been those who suggested that it wouldn’t be long before oil production began to inevitably decline. The layman’s understanding of “peak oil” typically boiled down to “The world is running out of oil.” But that was a misunderstanding of the actual peak oil […]

A future of cheap oil

14 Aug 2017   Peak Oil

An ongoing price slump is rattling the industry and weakening petrostates. How will low prices change the world? Here’s everything you need to know: How cheap is oil? Prices have hovered between $40 and $50 a barrel for the past year — far below the pre-collapse high of $147 a barrel in 2008. The U.S. shale revolution continues to cause a global glut in supplies of the liquid fossil fuel, depressing the price, and energy company Shell says it is bracing for a world where oil prices might stay “forever low.” Oil prices have historically been highly volatile, and demand for the commodity is higher than ever. But if the glut continues, it will pose an existential threat to the monarchy ruling Saudi Arabia, which relies on oil for as much as 70 percent of the kingdom’s income. Other petrostates, including Venezuela and Russia, are already in a state […]

The Reported Death of Peak Oil Has Been Greatly Exaggerated

3 Aug 2017   Peak Oil

Production for May by BOEM was 1673 kbpd and by EIA 1661, compared with 1661 and 1658 kbpd, respectively in April. March looks like the peak, at least near term, for the basin, especially with Hurricane Cindy impacting the coming June figures. The combined new fields added from late 2014 look to be peaking as well. Great White came back on line but xxx and yyy declined. In previous data I had omitted one big producing lease in Mars, which included the new Deimos field. With this added the production growth through 2017 is higher (and as shown later the decline in mature fields faster) than previously shown. There may be more increase to come: the Mars leases had three rigs operating through June, one dedicated for Deimos, which has now gone. The two platforms on the field each have a dedicated […]

Remember Peak Oil? Demand May Top Out Before Supply Does

12 Jul 2017   Peak Oil

When Bob Dudley, chief executive officer of British oil giant BP Plc, was asked at a recent conference when oil demand will peak, he had a precise answer: June 2, 2042.  The audience at the annual St. Petersburg International Economic Forum burst into laughter, knowing it’s impossible to predict such an event down to the day. But the American executive wasn’t speaking entirely in jest: The most recent edition of BP’s widely scrutinized Energy Outlook has global demand for crude maxing out in 2½ decades, give or take a year. That projection casts a shadow over one of the world’s largest industries, which until recently was far more concerned with boosting supply. The advent of electric cars, the fight against climate change, and slowing economic growth in China is dampening the world’s once boundless appetite for crude. Carmaker Volvo AB announced on July 5 that it will manufacture only electric or hybrid models from 2019 onward. Three days later, France said it would ban sales of cars with diesel and gasoline engines starting in 2040.

Patrick Pouyanne, CEO of Total SA, says demand will peak at some point in the 2040s, which is why the French energy giant he runs has been investing in solar power. Ben van Beurden, CEO of Royal Dutch Shell Plc, has said the zenith could arrive a lot sooner, in the next 15 years or so, if electric cars became really popular. “The energy transition is unstoppable,” Van Beurden told the St. Petersburg forum in early June. “In the most aggressive scenario, you can see oil already peaking in late 2020s or early 2030s.” In the time scale of the oil industry, where multibillion-dollar projects often take a decade or longer to come to fruition, that’s as close as it gets to saying “the day after tomorrow.”  If such forecasts prove right, oil prices are likely to remain low for a lot longer. That raises the possibility that some hard-to-reach deposits, like those in the Arctic, may never be tapped, turning what today are considered valuable reserves into assets of questionable worth. That worries big institutional investors such as BlackRock Inc. that manage mutual funds composed of energy stocks.

Oil companies may still adapt by diversifying into petrochemicals, for which demand is expected to keep climbing, and renewables such as solar, wind, and biofuels. Natural gas demand will also continue to grow, which is good news for companies like Exxon Mobil Corp. and Shell that have invested heavily in liquefied natural gas for export.  For Middle East nations that sit on huge hydrocarbon reserves, peak demand is more of an existential threat. “If you have 100 years’ worth of oil reserves, then 25 years looks like a very short time frame,” says Martijn Rats, a Morgan Stanley oil analyst in London. Saudi Arabia and Kuwait depend on oil for as much as 90 percent of their income. They and other Middle East nations have used their oil wealth to provide their populations with well-paid employment in the public sector and generous handouts—a tacit social contract underpinning their absolute petromonarchies.  The current bout of low prices offers clues about how these countries would handle a permanent drop-off in demand. With oil revenues sharply down, Middle East producers are dipping into their foreign exchange reserves—Saudi Arabia has drawn almost $250 billion since mid-2014. They’re also borrowing more. The combined public debt of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates is set to jump to almost $800 billion by 2020, more than double its 2015 level, according to the International Institute of Finance, a group representing large banks. The situation is direst in such places as Nigeria and Venezuela, where corruption and mismanagement have drained state coffers.

Oil Fields Pumping a Third of Supply Die Fastest in 24 Years

11 Jul 2017   Oil Supply, Peak Oil

The tussle for supremacy between OPEC and U.S. shale drillers is killing off older oil fields at the fastest pace in almost a quarter century. That could hurt the industry once the current glut has faded.  The three-year price slump triggered by the battle for market share choked off funds for aging deposits elsewhere, accelerating their decline. Output at older fields from China to North America — making up a third of world supply — fell 5.7 percent last year, the most since 1992, according to Rystad Energy AS. It’ll drop about 6 percent in 2017 if oil stays at current prices, the consultant said.  Oil fell from above $100 a barrel in 2014 to as low as $26 in 2016 as the Organization of Petroleum Exporting Countries opened the taps in an effort to stem the surge in shale production. That set off the worst industry downturn in a generation, forcing cost-cutting companies to focus on higher-margin assets at the expense of older, costlier fields. While OPEC changed course last year and curbed output to boost prices, shale was the main beneficiary and resurgent U.S. output has kept crude below $50.  “A lot of the focus is on OPEC and shale and not on the decline at these mature fields, where supply is struggling,” said Espen Erlingsen, a partner at Oslo-based Rystad. “We’re starting to see the long-term impact of lower oil prices.” Though new projects mean total global production continues to rise, the slide at aging fields may give OPEC a helping hand by reducing surplus supply today, according to Erlingsen. The danger for major oil companies — many of which are gathering in Istanbul this week for the World Petroleum Congress — is that the decline may be difficult to reverse, increasing the risk of future supply shortfalls as spending cuts take their toll for years to come.  “About $1 trillion in investments has been lost in the current downturn,” Saudi Aramco Chief Executive Officer Amin Nasser said Monday at the congress. “Conservative estimates suggest we need about 20 million additional barrels a day over the next five years.”

Fields in Decline

Oil deposits go through a number of phases, with production initially rising before flattening out and eventually waning as the reservoir pressure drops. About a third of global output comes from mature conventional fields — about 30 million barrels a day, or around three times Saudi Arabia’s supply — according to Erlingsen. Their fast-declining supply “is making OPEC’s life a little easier,” he said.

 

The World Keeps Not Running Out of Oil

10 Jul 2017   Peak Oil

The world has anticipated the “rapid exhaustion” of crude oil supplies for at least 100 years.Will it go on being close to running out of crude for the next 100? “Peak Oil” — the idea that global oil production will soon reach a maximum and then begin to decline — attracted a significant number of believers in the 1990s and early 2000s. Then unconventionals happened. Unconventional resource production blossomed in the United States. With rising crude production, the U.S. stopped soaking up the world’s excess oil supply. Instead of cutting back crude production to balance the market, Saudi Arabia increased production to protect its market share. And ta-da! — we got a global glut of crude and liquids, along with a truly major price collapse. Today, you are more likely to hear people talk about a possible worldwide peak in oil demand rather than a peak in oil production. […]

Fossil Fuel Empire: A World of Vulnerability

7 Jul 2017   Peak Oil

“It’s all about the oil,” many commentators said about the US assault on Iraq in 2003. Attributing a war to a single cause is almost always an oversimplification, but protecting access to the 20th century’s most important energy source has been a priority of US foreign policy since World War II. In part one of this series we considered the effects of the US military complex which has ringed the world for the past 75 years. This complex has depended on vast amounts of fossil fuel energy to move troops and munitions, and the US became a world power in significant part because of its endowment of oil. As Daniel Yergin recounts in The Prize: The Epic Quest for Oil, Money & Power Petroleum was central to the course and outcome of World War II in both the Far East and Europe. The Japanese attacked Pearl Harbor to protect […]

Fossil Fuel Empire: A World of Vulnerability

6 Jul 2017   Peak Oil

“It’s all about the oil,” many commentators said about the US assault on Iraq in 2003. Attributing a war to a single cause is almost always an oversimplification, but protecting access to the 20th century’s most important energy source has been a priority of US foreign policy since World War II. In part one of this series we considered the effects of the US military complex which has ringed the world for the past 75 years. This complex has depended on vast amounts of fossil fuel energy to move troops and munitions, and the US became a world power in significant part because of its endowment of oil. As Daniel Yergin recounts in The Prize: The Epic Quest for Oil, Money & Power Petroleum was central to the course and outcome of World War II in both the Far East and Europe. The Japanese attacked Pearl Harbor to protect […]

Brace for a devastating oil shock ahead

4 Jul 2017   Economy, Peak Oil

If Independence Day were about feting the U.S. weaning itself from foreign oil and forging a renewables future, the man behind our call of the day probably wouldn’t be sounding the alarm on a potentially devastating crisis by the end of the decade. But it’s not. And we aren’t. And he is. Yes, according to the latest warning from Chris Martenson of the Peak Prosperity blog, there’s an oil shock looming as early as 2018. Not just any oil shock, either. The impact of this particularly nasty spike will be severe and long-lasting, he believes. “There will be an extremely painful oil supply shortfall sometime between 2018 and 2020,” he explains. “It’ll be highly disruptive to our over-leveraged global financial system, given how saddled it is with record debts and unfunded IOUs.” Martenson said there is a way to avoid it — but that’s only if the world economy […]

The “Peak Oil” Pig Returns With A New Shade Of Lipstick

29 Jun 2017   Peak Oil

Proponents of a new strain of the always-tiresome, never-correct “Peak Oil” theory have returned to the public discourse , this time with a new theory coming from the other side of the crude oil supply/demand equation. Prior iterations of “Peak Oil” theory – which noted author Daniel Yergin traces all the way back to the 1880s, when alarmists claimed that oil would never be discovered anywhere west of the Mississippi River (Texas, Oklahoma, North Dakota, Louisiana, Wyoming, Colorado, Utah, New Mexico, Montana, Kansas, California and Alaska beg to differ) – have always focused on supply. According to “Peak Oil” theorists down through the decades, oil production has constantly been at or near its “peak”, and the end of the age of oil is always […]

Oil Industry To Waste Trillions As Peak Demand Looms

26 Jun 2017   Peak Oil

A new report from The Carbon Tracker Initiative analyzed what would happen if the oil market saw demand peak by 2025, a scenario that would be compatible with limiting global warming to just 2 degrees Celsius. The headline conclusion is that about one-third of the global oil industry’s potential spending – or about $2.3 trillion – would not be needed. In other words, the oil industry is on track to waste a massive pile of money if demand peaks in less than ten years. Of course, the vulnerability to peak demand varies by company. Carbon Tracker surveyed 69 global oil and gas companies, and their exposures range from 10 to 60 percent of their potential spending. That is, 10 to 60 percent of their spending could be unnecessary or wasteful if demand peaks by the middle of the next decade. The latest report adds more detail to the “stranded […]

The World Is Millions Of Barrels Away From Peak Oil

26 Jun 2017   Peak Oil

The notion that demand for crude oil will soon peak has largely replaced the idea from a decade ago that crude oil production was about to peak for geological reasons. This new idea is that we will no longer need oil (or at least a lot less of it) because consumers will choose alternatives to oil. But actual oil consumption numbers suggest that peak demand for oil won’t happen soon, and when it does happen it will do so at a demand millions of barrels per day (BPD) higher than current demand. Proponents of peak demand expect that exponential growth in electric vehicles (EVs), and to a lesser extent an increase in biofuel production will send oil demand into permanent decline. In fact, nearly a year and a half ago Bloomberg suggested that at a continued annual growth rate of 60%, electric vehicles could displace two million BPD of […]

Using Energy to Extract Energy – the Dynamics of Depletion

24 Jun 2017   Peak Oil

The “Limits to Growth Study” of 1972 was deeply controversial and criticised by many economists. Over 40 years later, it seems remarkably prophetic and on track in its predictions. The crucial concept of Energy Return on Energy Invested is explained and the flaws in neoclassical reasoning which EROI highlights. The continued functioning of the energy system is a “hub interdependency” that has become essential to the management of the increasing complexity of our society. The energy input into the UK economy is about 50 to 70 times as great as what the labour force could generate if working full time only with the power of their muscles, fuelled up with food. It is fossil fuels, rfined to be used in vehicles and motors or converted into electricity that have created power inputs that makes possible the multiple round- about arrangements in a high complex economy. The other “hub interdependency” […]

Falling Interest Rates Have Postponed “Peak Oil”

13 Jun 2017   Peak Oil

Falling interest rates have huge power. My background is as an actuary, so I am very much aware of the great power of interest rates. But a lot of people are not aware of this power, including, I suspect, some of the people making today’s decisions to raise interest rates. Similar people want to sell securities now being held by the Federal Reserve and by other central banks. This would further ramp up interest rates. With high interest rates, practically nothing that is bought using credit is affordable. This is frightening. Another group of people who don’t understand the power of interest rates is the group of people who put together the Peak Oil story. In my opinion, the story of finite resources, including oil, is true. But the way the problem manifests itself is quite different from what Peak Oilers have imagined because the economy is far more […]

Peak Oil Demand Is A Risk – Why Nobody Knows If Or When

1 Jun 2017   Peak Oil

The lead story in a recent The Wall Street Journal Report on Innovations In Energy was titled “Get Ready for Peak Oil Demand.” We have been getting ready for the past couple of years. However, in dealing with such a critical issue overhanging the future of this important global industry, the unanswered question is when will oil demand peak and begin to decline. To answer the question one needs to know when those forces reducing oil consumption will become meaningful. Then, one has to know how much the demand will be reduced. The assumptions underlying some of the most pessimistic forecasts for oil consumption treat demand-altering forces as switch-like – once thrown, oil use goes from light to dark, hot to cold, or rising to collapsing. It has a nearly immediate impact. However, it may be more appropriate to view the transition from expanding energy use to shrinking consumption […]

This Is What the Demise of Oil Looks Like

31 May 2017   Peak Oil

From giant companies like Exxon Mobil Corp. to OPEC members such as Saudi Arabia, oil producers say their industry will enjoy decades of growth as they feed the energy needs of the world’s expanding middle classes. But what if they’re wrong? There’s a host of reasons to think they might be. Here’s what happens when you test their central assumptions. The International Energy Agency sees oil demand rising more than 10 percent, to 103.5 million barrels a day by 2040, while companies predict even faster growth. But forecasters don’t always anticipate seismic shifts in technology and policy that could slow demand growth, or even eliminate it altogether in some parts of the economy. Even small changes could add up. Advances in vehicle efficiency, a rise in electric cars, tighter emissions standards and shifts to other fuel sources would result in oil demand much lower than the industry is banking […]

Get Ready for Peak Oil Demand

29 May 2017   Peak Oil

The world’s largest oil companies are girding for the biggest shift in energy consumption since the Industrial Revolution: After decades of growth, global demand for oil is poised to peak and fall in the coming years. New technologies that improve fuel efficiency are starting to push down the amount of gasoline and diesel that’s needed for transportation, and a consensus is growing that fuel demand for passenger cars could fall as carbon rules go into effect, electric vehicles gain traction and the internal combustion engine gets re-engineered to be dramatically more efficient. Western countries’ growth used to move in lockstep with their energy consumption, but that phenomenon is starting to decouple in advanced economies. While most big oil companies foresee a day when the world will need less crude, timing when that peak in oil demand will materialize is one of the hottest flashpoints for controversy within the industry. […]

Saudi Aramco CEO Says Peak Oil Demand Is a Misleading Theory

Petroleum use will keep growing for decades to come: Nasser World’s largest producer remains on track for IPO next year The boss of Saudi Arabia’s state oil company defended petroleum as the mainstay of the global economy, countering theories that demand will peak within years with his own forecast that consumption will keep growing for decades. “The global economy is forecast to double in size by 2050” so overall demand for energy will be higher, Saudi Arabian Oil Co. Chief Executive Officer Amin Nasser said at the International Oil Summit in Paris. The idea that oil demand is close to its maximum level is “equally as misleading” as now-discredited theories about peak oil supply, he said. Amin Nasser in Paris on April 27. His comments contradict recent opinions from some of the world’s largest oil companies. The surge in battery-powered vehicles will cause demand for oil-based fuels to peak […]

Oil Thesis For 2017 – International Production

15 Apr 2017   Peak Oil

Summary Recent data on international rig counts continue to show little increase into 2017. We anticipate oil production from non-OPEC, non-US production sources to decline in 2017 as depletion and decline rates take their toll; We differ from IEA’s interpretation of the trend line for non-OPEC, non-US production in H2 2017. This is our third and final article updating our oil thesis for 2017. Our prior articles addressed sentiment and fundamentals , and here, we’ll discuss international rig counts and what the low number of rigs portend for oil production. As always, we like to use our kids’ affinity for desserts to explain an oil concept, and kids are a bit of an expert when it comes to understanding decline and depletion rates. So, let’s use my daughter for instance. Like any oil producer with a new oil field, whenever my daughter gets a big bowl of ice cream, […]

Plentiful supply can meet strong demand, but forecasts rarely certain, admits BP exec

8 Apr 2017   Peak Oil

Gone forever are the days when the world stressed over what would happen when humanity began running out of oil—a fear based on M. King Hubbert’s theory of peak oil—or the point in time at which the maximum rate of petroleum extraction occurred. The North American shale revolution proved that not only are there plenty of hydrocarbons left to fuel humans for centuries, there are plenty of people with substantial grit and ingenuity to find ways to reach these resources. What worries the oil industry today is the idea of peak oil demand—when demand growth for oil and gas resources begins to stagnate and lose ground to other energy sources, such as renewables, due to cost and/or environmental concerns. “There could be a time, and it could be as early as 2035, when we start to see peak oil; not what is sometimes discussed by geologists where we start […]

Why Are We Waiting (for Peak Oil)?

6 Apr 2017   Peak Oil

Remember those long holiday road trips where the question endlessly repeated was “are we there yet”? Well, for many in the peak oil community, waiting for it to arrive has evoked a similar feeling, as the predictions of some academics, commentators, and bloggers have failed to materialize punctually. So, it’s worth revisiting some thoughtful papers that reveal a more sophisticated approach to timing the peak date. This may give people a greater appreciation of the challenges of predicting such a complex event. Various mathematical models have been evoked to relate production to estimations of the total amount of oil that can be extracted, also known as the ultimately recoverable resource (URR). These include linear, exponential and, most famously, Hubbert’s logistical model. Attempts have been made to determine the best fit of these models to historical production. However, in terms of prediction, none are necessarily more correct than the others. […]

Peak Oil, a tabletop game about Crisis and Profit

6 Apr 2017   Peak Oil

You are the top manager at one of the big oil companies , tasked with leading your enterprise into a future without oil . With peak oil looming ahead, you try to squeeze the last drops from oil fields around the world to gather the resources to invest into various oil replacement technologies. While you may try to emerge from the coming crisis by regular means, your competitors will most probably not , forcing you to dirty your hands as well. Peak Oil is an eurotrash-style game of worker placement, set collection and push your luck for 2 to 5 players of ages 10 and up . Games last around 45 to 60 minutes. What do the pros say? “ Peak Oil is an interactive game with just the right about of interference. I really dig the game because of the clever action selection mechanism along with the artwork […]

Oil Traders Warn There’s a Supply Crunch Looming

30 Mar 2017   Peak Oil

The oil market is risking a supply crunch as producers cut spending on major projects to focus on short-term low-cost shale output in the U.S., some of the top crude and products traders said. With oil prices hovering around $50 a barrel, current project spending is focused on “short-cycle” projects involving U.S. shale deposits, Daniel Jaeggi, president of Mercuria Energy Group Ltd. , said at the FT Commodities Global Summit in Lausanne, Switzerland, Wednesday. Hedging activity by these same producers is keeping future prices low until 2020, which is dissuading investment in major oil projects, he said. “We are sowing the seeds for potential instability in the future and more volatility, ” Jaeggi said. In three to four years, “you won’t be able to satisfy demand with short-cycle barrels.” After jumping 20 percent in the weeks following the decision by OPEC and 11 allies to curtail output to end […]

There Is No Such Thing As Peak Oil Demand

29 Mar 2017   Peak Oil

Notwithstanding that oil demand has increased for over 150 years, it will eventually stop increasing. If oil demand were to reach an actual peak, then the top might be easier to predict. As it stands, the forecast models of demand are likely predicting peak demand far later than it will be. The so-called balance of supply and demand has always been a moving target, a race to the top in which the two run neck and neck. Imbalances result from out-of-step growth rates and not from movements away from a stationary balance. Perversely, imbalances breed further imbalances as the supply and demand components are provoked in opposite directions but with different timing, magnitudes and inertias. Without sufficient damping, the market has often overcompensated. Of course, there are also exogenous events like political turmoil, policy shifts, technological innovations and demographic changes which can unexpectedly and significantly alter not just the […]

Can Big Oil Survive A CO2 Crackdown?

22 Mar 2017   Peak Oil

Over the long run, the oil business is under threat. There are various arguments about why that might happen. Peak supply people argue we are running out of oil. Peak demanders say that market saturation, efficiency, and new technologies will cause oil demand to peak and decline. Similarly, clean energy proponents argue oil will be undercut by electric vehicles. Another variation of this argument can be found in the “stranded assets” theory, which posits that low oil prices, cheaper alternatives or strict climate regulation – or some combination of the three – will keep vast volumes of unprofitable oil in the ground. A shrinking number of people see oil dominating the energy landscape decades from now. Or, even though it will likely still be a major source of fuel in, say, 2040, its growth is capped. Reasonable people can argue about how much oil will be consumed at what […]

Peak oil? Sooner than you think

21 Mar 2017   Peak Oil

For some time, there has been speculation about when global oil demand may peak – not because we will run out of oil or prices will spike making oil unaffordable, notions that are now considered passé – but because we won’t be needing as much of the stuff as we thought we would. And once the peak is finally reached – whenever that is – demand will begin to drop thereafter, perhaps precipitously. What is radically different about the new thinking about oil demand is that price, while still an important factor, no longer seems as important as it used to be. As further described alternatives to oil are or will soon be cheaper making the price of oil far less significant. Witness the fact that global oil has been growing at much slower clip in the last few years even though prices, hovering in the $40-60 range per […]

Big energy fears peak oil demand is looming

15 Mar 2017   China, Peak Oil

In an attempt to improve the quality of Beijing’s polluted air , the authorities are planning to mandate that every new taxi in the city must be electric or gas-fuelled, China’s National Business Daily reported last month. Beijing’s taxi drivers are no fans of the electric cabs in use there since 2014, complaining about inadequate battery range, alarming performance dips in cold weather and insufficient charging stations. But the thought of the Chinese government taking concerted action to push road transport towards alternative fuels will send chills down the spine of every oil producer worldwide. The prospect of “peak demand” for oil — an end to growth in global consumption — has been discussed in the energy industry for many years, without apparently coming much closer. But some of the world’s leading oil companies now see peak demand and sustained lower crude prices as a risk that they need […]

Peak Oil – Apocalyptic Environmentalism and Libertarian Political Culture

15 Mar 2017   Peak Oil

In 2011, while working toward a Ph.D. in American Studies at the University of Minnesota, Matthew Schneider-Mayerson began a study into the peak oil community. Approaching his subject from the perspective of a social scientist, he conducted his research by way of surveys, interviews, field notes and participant observation (the latter two gleaned through attending the 2009 Association for the Study of Peak Oil and Gas international conference in Denver). His book Peak Oil: Apocalyptic Environmentalism and Libertarian Political Culture is the result of this research. It investigates the ideology and subculture of “peakists,” explores how their movement was influenced by the ascendancy of libertarianism into mainstream American politics and the rise of Internet technology, analyzes peak oil-themed fiction, probes the reasons behind peakists’ political quiescence and discusses the peak oil subculture within the context of […]

Saudi Energy Boss Al-Falih Says Peak Oil Demand Talk Misguided

Saudi Arabia ’s top oil official dismissed the notion that global demand may soon peak and leave billions of barrels of untapped crude stranded in fields that will never be drilled. Khalid Al-Falih, energy minister for the world’s biggest oil-exporting nation, called talk about peak demand among energy executives, analysts and activists “misguided,” and predicted worldwide demand will reach 100 million barrels a day “very soon.” Al-Falih made his remarks Tuesday in a packed-house address at CERAWeek by IHS Markit in Houston, the most influential oil industry conference of the year. Although Al-Falih framed his comments in the wider context of the need to invest in future oil production, his warning comes as the kingdom prepares to sell shares in its state-owned energy giant Saudi Aramco . The Aramco public offering is on track for a 2018 listing, he said. The company and government officials are working on bringing […]

What the Saudi Aramco sale says about the state of the oil industry

As the oil and gas industry gathers in Houston for CERAWeek, a major annual event, geopolitical drivers to oil prices will be a focus. U.S. shale producers will be particularly attuned to backroom discussions about how Saudi Arabia and Russia are viewing new indications of restored momentum in drilling in the U.S. tight oil patch. The bullish reports on U.S. drilling rates come against the backdrop of statements from close advisers to President Donald Trump that the Organization of Petroleum Exporting Countries (OPEC) will make room for U.S. shale. Chances are OPEC will not abandon attempts to shore up the global oil market, regardless of the newfound staying power of U.S. production. That’s because Saudi Arabia has bigger fish to fry when it comes to oil prices. Saudi Arabia’s leaders are betting the farm that the sale of 5 percent of Saudi Aramco, the country’s national oil company (NOC), […]

Should Israel Fear The Peak Oil Crisis?

4 Mar 2017   Israel, Peak Oil

Conventional wisdom suggests that the world economy is in a slow but steady recovery from the 2008 financial crisis. Some economists, however, including Nafeez Ahmed , author of several books including “ A User’s Guide to the Crisis of Civilization: And How to Save It ,” are sounding the alarm about a looming global redux of that crisis rooted in natural resource scarcity, particularly oil. This alarming scenario, outlined by Ahmed in a recent article on Medium titled “Brace for the Oil, Food and Financial Crash of 2018,” foresees in 2018 a terrifying confluence of expensive oil, spiking food prices, a debt-fueled financial crisis, and depressed economic growth, with all of the attendant socio-political tensions we have seen in recent years accelerating. Think Trump, Brexit and the Arab Spring meet stagflation. Could this be bad news for Israel, in its arid, oil-drenched, and politically fragile neighborhood? Let’s consider for […]

Doomsday Scenario: A World Without Oil

3 Mar 2017   Peak Oil

Suppose the rapture happened. Not the kind followed by the Second Coming of Jesus as promised by Paul, but a rapture of oil. Imagine that one night, just after the last parents finish tucking in their toddler after falling into a post-ice cream coma, that … poof! All of the world’s oil in untapped reserves vanished from the Earth into a Great Fossil Fuel Heaven. What remains is just the oil that exists in government or private inventories – extremely limited in quantity. Initially, this would lead to the speedy recovery of oil prices, which have suffered a decline over the past three years due to a massive supply gut. An output reduction deal by the Organization of Petroleum Exporting Countries (OPEC) and a handful of non-members is no match for a disappearing act of biblical proportions. In the United States, employers who require the physical presence of their […]

No Peak Oil For America Or The World

3 Mar 2017   Peak Oil

Oil is more plentiful than you can imagine. And we keep figuring out easier and more economical ways to get it out of the ground. In 1938, the famous geologist M. King Hubbert came up with the concept of peak oil, which is defined as having extracted half of the recoverable, conventional oil reserves. After that, oil production declines and cannot keep up with growing demand as the population continues to rise. We used to think about Peak Oil like this – the reserves are finite, we know where they are and how long they will last, and we will start running out soon. But with recent technological innovations, we keep finding new oil deposits that are now recoverable and a peak won’t happen for a century or more. Source: Association for the Study of Peak Oil & Gas (ASPO) In Hubbert’s time, most of the conventional oil reserves […]

Peak gasoline demand looms with engine efficiency gains

3 Mar 2017   Peak Oil

Demand for gasoline in the United States, which accounts for a tenth of global oil consumption, is expected to peak next year as engines become more efficient, WoodMackenzie analysts said. Global demand for gasoline, which accounts for more than a quarter of the world’s oil consumption, is set to peak as early as 2021 even in the face of relentless growth in the vehicle fleet, according to the Edinburgh-based consultancy. A rise in the number of hybrid and electric cars such as the Nissan ( 7201.T ) Leaf, Toyota ( 7203.T ) Prius and Tesla ( TSLA.O ) as well as tighter fuel standards in Europe and the United States will contribute to a historic shift in consumption. The United States saw spectacular growth in gasoline demand following the collapse […]